The IRS recently updated its descriptions of the tax rules applicable to the employer-provided parking benefit. Employer paid parking that is a “qualified transportation fringe” (QTF) is excluded from employees’ gross income up to the statutory limit (e.g., $280 per month in 2022) under IRC Code Section 132(f). A QTF includes qualified parking, which is on or near the employer’s business premises or at a location from which the employee commutes to work by mass transit facilities, commuter highway vehicle, carpool or car service.
The value of employer-provided parking is its fair market value (FMV), determined based on all the facts and circumstances, including the cost that an individual would incur in an arm’s length transaction for parking at the same site or in a comparable lot in the same general location.
Employers providing qualified parking benefits should review the IRS website at the link provided below and document how they determine the value of the parking benefit in case of an audit. The updated IRS page also includes a key checklist for auditors to review an employer’s parking benefit that may be helpful for employers to prepare their documents and keep their records relating to their parking benefit.
IRS Webpage: Qualified Parking Fringe Benefit (April 25, 2022) »
PPI Benefit Solutions does not provide legal or tax advice. Compliance, regulatory and related content is for general informational purposes and is not guaranteed to be accurate or complete. You should consult an attorney or tax professional regarding the application or potential implications of laws, regulations or policies to your specific circumstances.
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